December 22, 2003

The U.S. government is the world's largest purchaser of goods and services, buying in excess of $225 billion of products annually. According to the San Diego Workforce Partnership's most recent San Diego Barometer, defense spending in Southern California is expected to increase by more than 40 percent by 2008.

And the Small Business Administration (SBA) estimates that small business owners sell approximately $40 billion worth of products and services to the government each year. So it does seem natural, with commercial markets remaining flat and defense business a longstanding local pursuit, that enterprising companies will look to the federal marketplace for new opportunities.

But while the commercial sector is familiar to most business owners, there is a tremendous amount of mythology surrounding government procurement. Misguided expectations can lead companies to either avoid a credible opportunity or to have grandiose notions of prospects -- and neither of these is a realistic perspective.

The rules of government contracting do result in a very different landscape from that of the commercial sector. But knowing the rules -- and being willing to not only play by them but also to structure your business to be in compliance with them -- is a critical part of the process.

For instance, while a day's delay in responding to a commercial request for a quote might be completely insignificant, being even one minute late in submitting a response to a government contract bid might result in its being rejected outright.

While the private sector is somewhat flexible, the federal sector is highly structured. By law, a federal agency must seek to maximize competition and ensure that taxpayer dollars are spent fairly.

So how does a commercial company bring its products and services to the attention of the federal customers? Well, we are fortunate in San Diego to have a host of industry and professional associations that can provide networking, as well as links to teaming and subcontracting opportunities (see sidebar). Once you have made a solid networking connection, you may want to explore some of the basic steps to getting started.

Familiarize yourself with federal contracting procedures

The Federal Acquisition Regulations (FAR), www.arnet.gov/far, outlines the rules through which the government conducts business. The FAR includes more than 1,500 pages -- but there are experts around to help, so don't despair.

Codes, classifications, registrations and certifications

In most cases, you will need a variety of certifications in order to participate in the process. There are specific certifications for small companies as well as for those that are either minority-, woman- or veteran-owned, and there are often contractual requirements for federal agencies to allocate some purchases to these certified firms.

Identify agency prospects and make contact

Basic market research and networking skills can help you determine which offices purchases the type of products or services which your firm supplies. As a starting point, one place to search for procurement opportunities is FedBizOpps, www.fbo.gov, a clearinghouse of government announcements for goods and services valued at over $25,000.

Explore subcontracting and teaming opportunities

Many small companies get their start by subcontracting rather than by selling directly to an agency. By contributing to a multibusiness contract, a subcontractor can focus on its core capabilities and limit the scope of its activities to a more manageable level.

SUB-Net, web.sba.gov/subnet, is the SBA's Subcontracting Network. Small businesses can review the Web site to identify opportunities in their areas of expertise.

Consider GSA schedules

If you make a product -- a widget of any sort -- that can be purchased outright by a federal agency, then being listed on a General Services Administration (GSA) Schedule at www.gsa.gov may be a reasonable place to start. This agency acts as a catalyst for nearly $66 billion in federal spending annually. The process does require a significant investment of time and paperwork, but may be well worth the effort if it results in sales or contracting opportunities.

Importance of marketing and outreach

Being listed on a schedule won't generate sales unless you make certain that the right buyers can find you. Although the process and procedures for reaching buyers may vary greatly between the commercial and government markets, ultimately the goal is the same. In order to sell to a government agency, a company has to engage in the process and bring attention to itself in an appropriate manner.

Some tips on marketing:

Learn the language, requirements and protocol of procurement;

Understand and respect the regulations that impact your customers -- a faux pas can be criminal; and

Find a niche in which your products and services can differentiate themselves -- position your firm more specifically than just "software engineering" or "Web integration" to demonstrate its unique value.

Be persistent, diligent and efficient with your research and marketing. With the government, as in the commercial sector, success depends on effectively marketing quality products or services to a receptive customer. Marketing to the government is definitely characterized by a lengthy process, but many small firms do find their way and have built successful businesses in the process.

Orion is president and CEO of the San Diego Regional Technology Alliance, a nonprofit corporation that promotes technology growth in the region by providing business assistance to high-tech and biotech entrepreneurs and emerging growth companies. She can be reached at tyler.orion@sddt.com.